Putin’s invasion of Ukraine suggests the ‘peace dividend’ is fading
Russia’s brutal invasion of Ukraine should be a wake-up call for western politicians, corporate leaders and economists who advocate a green and equitable future but lack any practical or strategic sense of how to get there. Regardless of what short-term tactics Europe and the US use in responding to the current crisis, their long-run strategy needs to put energy security on a par with environmental sustainability, and funding essential military deterrence on a par with financing social priorities.
The Soviet Union collapsed in 1991 in no small part because Russia’s leaders, most of all President Boris Yeltsin and his economic advisers, recognised that the Soviet communist military-industrial complex could not afford to keep up with the west’s superior economic might and technological prowess. Today, with Russia’s economy less than a twentieth the combined size of the US and EU economies, the same strategy of vastly outspending Russia on defence should be much easier to execute. Unfortunately, there is a hesitancy in many western societies, particularly on the left, to admit that defence spending is sometimes a necessity, not a luxury.
For many decades, western living standards have been boosted by a massive “peace dividend”. For example, US defence spending fell from 11.1% of GDP in 1967, during the Vietnam war, to 6.9% of GDP in 1989, the year the Berlin Wall fell, to just over 3.5% of GDP today. If US defence spending as a share of GDP was still at the Vietnam-era level, defence outlays in 2021 would have been $1.5tn (£1.1tn) higher – more than the government spent on social security last year, and almost triple government spending on non-defence consumption and investment. Even at the level of the late 1980s, defence
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